Dalal Street

Aditya Birla Nuvo’s 2Q FY09 net loss stood at Rs1.05bn, vs loss of Rs283mn in 1Q 09. going forward in FY09, the company is expected to report a Loss.

Pending promoter warrants imply ~Rs34bn (~50% of standalone FY08 capital employed) of potential cash infusion for the Co. The warrants are live until Aug ’09 but we see low likelihood of subscription as the exercise price of Rs2007/sh is ~4-5x current sh. price. In the absence of promoter funding, we expect the capex & growth plans to be scaled back (partly factored into life-insurance assumptions).

ABNL has a 25% stake in Idea Cellular which yields to Rs 530 / share of ABNL pro-rated. ABNL’s financial services business is valued at an enterprise value of Rs686/sh (down 30% vs earlier SoP). Enterprise value of ABNL’s remaining businesses stands at Rs431/sh. Net Debt is at Rs 773 / share as we no longer expect the Birla Group management to subscribe to Warrants at 4 times the CMP.

Glenmark’s 2Q PAT (Rs1.18bn) came in 5% ahead of MLe driven by strong 50% topline growth and stable 30%+ EBITDA margin. US generics business grew sharply by 117% whereas Latam and RoW markets growth is back on track. Revise core earnings estimates by 8-9% to reflect lower margins.

With 35 products in market, US generics business grew 117% YoY (Rs1.76bn) leading to overall generics business growth of 86%. Impact of new launches (out of 40 ANDAs pending approval) is likely to reflect in the next few qtrs. Latam and SRM markets bounced back after a weak 1Q and are expected to show strong growth going forward. Domestic business growth is robust at 17% (vs industry grwth of 11% and guidance of 15%). Milestone guidance maintained for FY09E.

Fully Diluted EPS is expected to be Rs 30 for FY09.